The National Reserve Bank of Tonga’s board of directors at its meeting on the 18th September 2018 approved to maintain its current monetary policy measures. This is to encourage utilisation of the excess liquidity in the banking system, through further lending, particularly to the growth sectors, in order to support economic growth and the recovery from Tropical Cyclone Gita, and strengthen the monetary policy transmission mechanism.
- maintain the monetary policy rate at 0% (zero interest rate policy);
- maintain the minimum loans/deposit ratio of 80%;
- maintain the Statutory Reserve Deposit ratio at 10% effective in July 2017; and
- maintain the inflation reference rate at 5%.
The Governor of the Reserve Bank, Sione Ngongo Kioa, indicated that the activities in the domestic economy picked up, suggesting a vibrant start for the 2018/19 financial year. From the primary sector, the total volume of agricultural exports increased due to a rise in exported yam, taro and coconuts. The demand for individual housing and business loan to mining and quarrying sector continued to support activities in the secondary production. In the tertiary sector, international air arrivals rose coinciding with an increase in travel receipts, supported by an increase in the number of scheduled flights and events took place during the month. Container and vehicle registrations also increased indicating a continued strong activity in the sector.
Consumption activities rose over the month as indicated by an increase in the Consumption Tax (CT) collected and businesses’ total sales. This coincided with the increase in total containers and a rise in wholesale & retail import payments. Banks’ lending to households also increased which may have translated into solid consumer spending. This is supported by remittance receipts and new loan commitments over the month. The anticipated rise in remittance receipts and the continuous increase in new loan commitments to households will support strong consumption spending in the future.
The banking system remained sound maintaining strong capital position, supported by comfortable profitability, and nonperforming loans continued to remain low. Liquidity in the banking system (reserve money) increased due to an increase in deposits by the commercial banks to the Reserve Bank’s vault. Higher deposits outweighed the growth in lending over the month resulted in a decrease in the loans to deposit ratio. This continued to remain below the 80% minimum loan to deposit ratio which indicates excess liquidity in the banking system and that there is capacity for further lending by the banks. The weighted average interest rate spread widened over July due to an increase in the weighted average lending rate and a decline in the weighted average deposit rate.
The foreign reserves increased to $476.5 million in July 2018 due mainly to lower services and primary income payments. This is equivalent to 7.9 months of import cover.
Favourable movement in both local and imported food prices drove the continued decline in the monthly inflation. A decline in domestic prices over the month was driven by a fall in the domestic fruit and vegetable price. Imported prices however rose due to an increase in the prices of tobacco. Despite the fall in the monthly inflation rate, the annual headline inflation increased to 6.1%. This was attributed to lower commodity prices in July 2017 compared to the current period. Imported prices increased over the year due to higher prices of imported food, fuel and tobacco. The domestic prices also rose with food items as the lead contributor followed by kava-Tonga.
The Reserve Bank’s outlook for strong domestic economic activity remains in the medium term however weather uncertainty pose a risk to the outlook. According to the latest Climate Update from the Tonga Meteorological Service, rainfall is expected to continue recording below average rainfall in the near term. This will pose an impact in the primary sector and other sectors of the economy in the future. The level of foreign reserves is expected to remain at comfortable levels and inflation is anticipated to fall below the Reserve Bank’s inflation reference rate of 5% per annum at the end of 2018. The banking system is expected to continue to remain strong.
Given the recent developments and the outlook on the monetary policy targets, the current monetary policy stance is considered appropriate in the medium term. The Reserve Bank will continue to remain vigilant, closely monitor developments in the domestic and global economies and may change its monetary policy setting to support its monetary policy objectives.
Tu’utu’uni ki he Fokotu’utu’u Ngāue Fakapa’anga
Na’e tali ‘e he Poate ‘a e kau Talēkita ‘a e Pangikē Pule Fakafonua ‘o Tonga´ hili ‘enau fakataha ‘i he ‘aho 18 ‘o Sepitema 2018, ke kei hokohoko atu ai pē ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga ‘a ia ‘oku hā atu ‘i lalo´. ‘Oku fakataumu’a eni ke ngāue’aki ‘a e hulu ‘i he pa’anga ngāue ‘a e ngaahi pangikē, ‘o fakafou mai ‘i hono tuku atu ‘a e ngaahi nō ki tu’a ke ne faka’ai’ai mo pātoloaki ‘a e tupu faka’ekonōmika ‘a e fonua´ pea mo tokoni ki he fakaakeake meiˊhe saikolone fakatalopiki ko Gita (Tropical Cyclone Gita).
- Ke kei hoko atu pe hono ta’etotongi tupu ‘a e pa’anga ngāue ‘a e ngaahi pangiké (Exchange Settlement Account) ‘oku fakahū ‘i he Pangikē Pulé;
- Ke ‘oua e toe ma’ulalo hifo he pēseti ‘e 80 ‘o e lahi e ngaahi nō ‘oku tukuatu ‘ehe ngaahi pangike ‘o fakahoa ki he lahi ‘o ‘enau ngaahi fakahū pa’angá (loan/deposit ratio);
- Ke hiki hake e lahi ‘o e pa’anga ‘a e ngaahi pangiké fakakomesiale, ‘oku tu’utu’uni fakalao ke tauhi ‘i he Pangikē Pulé (Statutory Reserve Deposit) ‘i he pēseti ‘e 10 ‘o kamata ‘i Siulai 2017; pea
- Ke tu’uma’u pē ‘a e fakaámu ki he hikihiki e totongi ‘o e ngaahi koloá ‘i he pēseti ‘e 5 ‘i he ta’u.
Na’e fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na’e lelei ange ‘a e tupu ‘a e ngaahi ngāue faka’ekonōmika´ ‘i he lolotonga ‘o e māhina´, ‘o ne fakahaa’i ai ‘a e tu’unga lelei ‘oku kamata ‘aki e ta’u fakapa’anga 2018/19. ‘I he sekitoa ki he ngoue´, toutai´ pea mo e vao ‘akau´ (primary sector), na’e kake ‘a hono uta atu e ngoue ki muli´, makatu’unga mei he lelei ange ‘a hono hū atu ‘o e ‘ufi´, talo´ pea mo e niu´. ‘Oku hokohoko atu ai pē ‘a e tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloa´ (secondary sector) ‘o hā mai mei he kei lahi pe ‘a e ngaahi nō fale taautaha´ pea pehē ki he nō ki he keli’anga koloa mo e maka´ (mining and quarrying). ‘I he sekitoa ki he ngaahi ngāue´ (tertiary industry), na’e tupu e tokolahi ‘a e kakai ne tu‘uta vakapuna mai ki Tongaˊni mei tu‘apule‘anga´ ‘o fenāpasi ia mo e tupu ‘i he pa’anga hū mai mei he fefolau’aki´ pea pehē ki he kake ‘i he lahi e vakapuna ne tu’uta mai ki Tonga ni´ pea mo e ngaahi katoanga ne fakahoko ‘i he lolotonga ‘o e mahina´. Na’e toe tupu mo e lahi e koniteina mo e me’alele na’e lēsisita ‘i he māhina´ ‘o hā mei ai e toe lelei ange ‘a e ngaahi ngāue ‘i he sekitoa ko ‘eni´.
Na’e tupu e ngaahi fiema’u´/ fengāue’aki´ (consumption activities) ‘i he māhina´ ‘o hā mai ai e tupu ‘i he pa’anga hū mai mei he tukuhau ngāue’aki´ (Consumption Tax) pea mo e hulu ‘i he pa’anga hū mai mei he fakatau ‘a e ngaahi pisinisi´. Na’e fenāpasi eni mo e lahi ange ‘a e ngaahi koniteina na’e lesisita´ pea pehē ki he tupu ‘i he totongi ‘o e ngaahi koloa fefakatau’aki ‘oku hū mai mei tu’apule’anga´. Na’e tupu ‘a e ngaahi nō kuo tuku atu fakataautaha´ ‘o fakamahino mei ai ‘a e toe lahi ange ‘a e ngaahi fakamole ‘a e kakai´. Na’e tokoni’i eni ‘i he tupu ‘a e talafi pa’anga mei muli´ mo e ngaahi nō fo’ou na’e tali ‘i he lolotonga ‘o e mahina´. ‘Oku fakafuofua ‘e toe lahi ange ‘a e ngaahi fakamole´ ‘i he kaha’u´ ‘o tokoni’i ‘e he ngaahi nō fo’ou fakataautaha´ pea pehē ki he fakafuofua ‘e hokohoko atu ‘a e kake ‘i he talafi pa’anga mei muli´.
‘Oku kei ‘i he tu‘unga lelei pe ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘o makatu‘unga meiˊhe tu‘unga fakafiemālie ‘a ‘enau tupu´ (profitability) pea pehē ki he kei ‘i he tu‘unga ma‘ulalo ai pē ‘a e ngaahi nō ‘oku palopalema´. Na‘e hiki hake ‘a e pa‘anga ngāue (liquidity) ‘a e ngaahi pangikē ‘o makatu’unga mei he tupu ‘a e fakahū pa’anga ‘a e ngaahi pangikē ki he Pangikē Pule´. Na’e lahi ange ‘a e ngaahi fakahū pa’anga´ ‘o fakahoa ki he kake ‘o e ngaahi nō kuo tuku atu´ ‘o ne fakatupunga ai ‘a e holo ‘i he lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa‘anga´ (loans/deposit ratio). ‘Oku kei ma’ulalo pē ‘eni ‘i he tu’unga kuo tu’utu’uni ‘e he Pangikē Pule´ ke a’usia ‘e he ngaahi pangikē, ‘a ia ko e peseti ‘e 80. ‘Oku hā mahino mei heni ‘a e kei ‘i ai pē ‘a e faingamālie ke toe fakalahi ‘a e ngaahi nō ke tuku atu ‘e he ngaahi pangikē. Na’e kake ‘a e hulu ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō mo e ‘avalisi ‘o e totongi tupu ‘i he fakahū pa’anga´ (weighted average interest rate spread) ‘i Siulai ‘o makatu‘unga meiˊhe kake ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate) pea mo e holo ‘i he ‘avalisi ‘o e totongi tupu fakahū pa’anga (weighted average deposit rate).
Na‘e tupu ‘a e pa’anga talifaki ‘i muli´ (foreign reserves) ki he $476.5 miliona ‘i Siulai 2018, makatu‘unga meiˊ he si’isi’iange ‘a e totongi ki he ngaahi ngāue (services) pea mo e totongi ki he pa’anga hū atu tefito´ (primary income payment). ‘Oku fe‘unga ‘a e tu‘unga lolotonga ‘o e pa‘anga talifaki´ pea mo e māhina ‘e 7.9 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ.
Na’e tokoni e fe’unu’aki ‘i he totongi koloa me’akai fakalotofonua´ mo e totongi ‘o e me’akai hū mai mei tu’apule’anga´ ki hono holoki ‘o e hikihiki ‘i he totongi fakalūkufua ‘o e koloa´. Na’e tokoni e holo e totongi ‘o e fua’i’akau´ mo e vesitapolo´ ki he holo ‘a e totongi koloa fakalotofonua´. Na’e hiki hake ‘a e totongi koloa hū mai mei muli΄, makatu’unga mei he kake ‘a e totongi ‘o e tapaka´. Neongo ‘a e holo e hikihiki ‘i he totongi fakalūkufua ‘o e koloa´ ‘i he mahina´, kā na’e kei kake pē ‘a e totongi fakalūkufua ‘o e ngaahi koloa fakata’u´ ki he peseti ‘e 6.1. Na’e makatu’unga eni mei he ma’ulalo ange ‘a e totongi ‘o e ngaahi koloa´ ‘i Siulai 2017 ‘o fakahoa ki he totongi lolotonga´. Na‘e hiki ‘a e totongi koloa hū mai mei muli΄ ‘o makatu‘unga mei he hiki hake ‘a e totongi ‘o e me’akai hū mai mei muli΄, totongi lolo΄ pea mo e tapaka΄. Na‘e toe hiki mo e totongi koloa fakalotofonua΄ makatu’unga mei he hikihiki ‘a e ngaahi koloa me’akai´ pea pehē ki he kava-Tonga΄.
‘Oku kei fakafuofua ‘e he Pangikē Pule´ ‘e tupu mā’olunga ‘a e tu’unga faka’ekonōmika ‘a e fonua´ ‘i he kaha’u´, kā ‘e ala uesia ‘a e fakafuofua ko ‘eni´ mei he ngaahi feliliuaki e ‘ea´. Fakatatau ki he fakamatala fakamuimuitaha kuo tuku mai ‘e he Tafa’aki Talamatangi ‘a Tonga, ‘oku fakafuofua ‘e ma’ulalo ange ‘a e ‘uha´ ‘i he ‘avalisi´ ‘i he ngaahi māhina ka hoko mai´. ‘E ala uesia heni e ngaahi ngāue ‘i he sekitoa ngoue´ mo e toutai´ pea pehē foki ki he ngaahi sekitoa kehekehe pē ‘i he kaha’u´. Ko e pa‘anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē. ‘Oku toe fakafuofua ‘e ‘i he tu’unga ma’ulalo pē ‘a e hikihiki ‘i he totongi koloaˊ pea ‘e ma’ulalo pē ia ‘i he tu’unga fe’unga (reference rate) ko e pēseti ‘e 5 ‘i he faka’osinga ‘o e 2018. ‘Oku hokohoko atu ai pē ‘a e tu’unga fakafiemālie ‘a e ngaahi pangikē.
Koe’uhī ko e ngaahi fakamatala ko ‘eni´, ‘e hokohoko atu ai pē ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga´. Pea ‘e kei hokohoko atu ai pē ‘a e tokanga ‘a e Pangikē Pule´ ki hono siofi mo muimui’i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonua´ mo tu’apule’anga´, mo tu’u mateuteu ke liliu ‘a e ngaahi fokotu’utu’u ngāue fakapa’anga ‘o ka fiema’u pea mo fakapapau’i ‘e ‘ikai ke kaunga kovi ‘a e ngaahi fakalakalaka ‘oku hoko´ ki he tupu faka’ekonōmika ‘oku ma’uma’uluta mo tolongaˊ.
